Experts for Credit Risk Management in Russia, Baltic States and CIS Credit information Trade Credit Insurance Debt collection © 2011 IGK Group IGK – Specialist for credit risk management 1991 – 2011 1991 First IGK company was registered in Germany 1992 First companies of IGK Group were registered in Russia and Baltic States 1993 IGK Holding was registered in Germany. SCRL (Coface) and Intercredit Holding became members of IGK Holding. 1994 Expansion in Lithuania, Latvia, Estonia, Ukraine, Russia 1998 2007 Separation from Coface 2007 Cooperation with leading Trade Credit Insurance 2011 companies: Euler Hermes, Atradius, Ducroire, Sinosure, Ksure, Mapfre, Ingosstrakh-ONDD and other. ® 2 IGK – Specialist for credit risk management IGK has 20 years experience in credit risk management services: Credit reports Monitoring Debt collection Trade Credit Insurance Factoring Consulting Financing ® 3 IGK – Specialist for credit risk management IGK AG Bonn, Germany IGK Credit Management IGK Service Latvia Moscow IGK Service Lithuania IGK Credit Management Nizhnij Novgorod IGK Service Estonia IGK Credit Management Samara IGK Broker Baltic IGK Credit Management Chelyabinsk Balt Risk Baltics IGK Insurance Broker Russia IGK Services Rus Risk Ukraine Tambov Production office IGK Services Ukraine ® 4 IGK – Specialist for credit risk management Red –IGK office Blue/Green –IGK network ® 5 IGK – Specialist for credit risk management Payment terms = trade credits Debt - management Supplier Client Payment obligations ??? ® 6 IGK – Specialist for credit risk management Structure of balance sheet from your company Assets Equity & Liabilities Fixed assets Capital & Reserves - Tangible % - Share capital % - Intangebile % - Additional paid in capital % - Financial % - Fair value and other reserves % - Retained earning carried forward % Current assets Liabilities - Stock % - Bank loans % - Trade receivables % - Payables to suppliers % - Other receivables % - Advance from trade debtors % - Cash % - Other current liabilities % ® 7 IGK – Specialist for credit risk management Analysis of clients – information gathering IGK reports are approved by all OGRN-INN-KPP main European Trade Credit Legal address Insurers for risk evaluation Administrative Real address Data Share capital Articles of incorporation Power of attorney Annual reports from Bank details last 3 years Financial Data Key ratios Plan for the next years Employees – •Top management •Qualification •Fluctuation Management Products Technology Sales strategy Own payment experience Finance Experiences from 3rd parties Vendors (business partners, information Payment Sector agencies, trade credit insurer) experience Economy Action for payments Bankruptcy procedures ® 8 IGK – Specialist for credit risk management Analysis of clients – information sources • www • Financials • Mass media • Management • Journals • Transparency • Scientific publications • Trust Public Company sources Professional Official information sources gatherer • Information agencies • Register • Rating Agencies • Statistik • Trade Credit Insurer • Court ® 9 IGK – Specialist for credit risk management Russian challenges • Limited transparency of Russian management • Tax optimized financial reports • Limited profit • Limited turnover • Limited equity • Limited credit history • Group structures – without official connections • Using from off-shore entities • Gry schemes ® 10 IGK – Specialist for credit risk management Analysis of clients Evaluation Mathematical systems •Trade Credit Insurer •IGK Scoring systems •Information agencies Expert opinion •Risk Committee of company ® 11 IGK – Specialist for credit risk management Analysis of clients Evaluation IGK principles Rating Probability of default within next 12 month Range Turnover in k € A++ Lowest risk. Excellent business. High credit term 0,09% R1 1 - 50 A+ Lower risk. Old established, stable company 0,47% R2 51 - 150 A Low risk. Secured business on uptrend 1,07% R3 151 - 500 B++ Risk below normal. Reliable business 2,18% R4 501 - 1.500 B+ Normal risk. Business on uptrend 4,46% R5 1.501 - 5.000 B Normal risk 13,36% R6 5.001 - 20.000 C Risk above normal. Short term only 31,83% R7 20.001 - 70.000 C- High risk. Full security only 61,70% R8 70.001 - 200.000 D Higher risk. No credit term to be granted 84,15% R9 200.001 - 500.000 F Highest risk. Company on the verge of bankruptcy 92,03% R10 500.001 - ® 12 IGK – Specialist for credit risk management Securities Physical Personal Insurance Factoring Mortgage Guarantee from bank Trade Credit Insurance Non recourse Pledge Recourse Surety legal entity Deposit Surety from private person … Letter of Credit ® 13 IGK – Specialist for credit risk management Principals of Trade Credit Insurance Alfa Client 1 Atradius Strakho Insured vanjie Client 2 IGK Coface Coface Insurance Insured Broker Client 3 Ingos ONDD strakh- ONDD Insured Client n Euler ROSNO Hermes Risk transfer to Trade Credit Insurer Portfolio of debts Credit limit Receivables ® 14 IGK – Specialist for credit risk management Principals of Trade Credit Insurance RUR. Maximum liability Credit line Datum line days Payment term Automatic cancellation Overdue notification Waiting period Indemnification ® 15 IGK – Specialist for credit risk management Factoring + Trade Credit Insurance Non–recourse + recourse factoring Customer 1 Customer 2 Factoring Client 1 Customer n Customer 1 Credit Insurer Factoring Company Factoring Client 2 Customer 2 Customer n Alfa Strakhovanjie Customer 1 Coface Factoring Client n Customer 2 Credit Insurer Customer 3 Ingostrakh-ONDD Customer n ROSNO / Euler Hermes ® 16 IGK – Specialist for credit risk management SWOT Analysis - Trade Credit Insurance Strengths: Weaknesses: Risk mitigation Bureaucratic requirements Financial stability Risk policy of insurer not stable Risk can be calculated Cover depends not only from creditworthiness of debtor Collateral – worthy and tax optimized Strengthen debt management in company Trade Credit Insurance Opportunities: Conquer new markets with giving payment terms Threats: Strengthen own position in front of clients in case of Total following the risk policy of insurer by management disputes concerning payment delays Increase transparency and commercial goodness of market player ® 17 IGK – Specialist for credit risk management Securities Available Effort to create Expenses Worth Mortgage Pledge Bank guarantee Surety Letter of Credit Trade Credit Insurance Factoring ® 18 IGK – Specialist for credit risk management Analysis of clients Rating\Limit <10 <25 <50 <75 <100 <250 <500 <1000 <2500 <5000 >5000 A++ A+ A B++ B+ B C C- D F Risk category 1 Risk category 2 Risk category 3 Risk category 4 ® 19 IGK – Specialist for credit risk management Services of IGK group Information Legal Securities Debt collection ® 20 IGK – Specialist for credit risk management Benefits of cooperation with IGK-group Alfa Insured Buyer 1 Why work with IGK? Strakhovanjie • 20 years experience in credit risk management in CIS and Baltics Coface Buyer 2 Insured IGK • Whole spectrum of services for Ingosstrakh- Insurance Buyer 3 professional credit risk management ONDD Broker • Information Insured ROSNO / • Trade credit insurance Euler Hermes Buyer 4 • Debt collection • Related services (IT, seminare,…) Client 1 Buyer 5 Non insured • Economic power by using the complexity of all market participants - Client n IGK Credit Buyer 6 Management suppliers, trade credit insurer, banks, Non insured factoring companies together with information agency and insurance Factor n Buyer 7 broker from IGK. This helps to strengthen the position of supplier Non insured Bank n Buyer n who works with IGK group. 2 1 ® 21 IGK – Specialist for credit risk management Contact details: OOO IGK Insurance Broker 1st licensed broker in Russia specialized on Trade Credit Insurance Bolshaja Semenovskaja, d.40, bldg.. 1, office 609, Business Center “Agat” 107023 Moscow, Russian Federation Andreas Steinborn Deputy General Director mobile: +7 495 22 63 930 email: [email protected] Nataljia Pavlova Key account manager commercial email: [email protected] Ekaterina Bolabko Key account manager risk email: [email protected] tel.: +7 495 287 47 60 web: www.igk-group.com ® 22 IGK – Specialist for credit risk management Andreas Steinborn Status Director of IGK AG, Bonn since September 2010 Deputy General Director of OOO IGK Insurance Broker Member of the board of the Association of Professional Insurance Broker in Russian Federation Consultancy Credit Risk Management in Russia information, trade credit insurance, debt collection, factoring Bolshaja Semenovskaja, Career Study Economy: Hochschule für Ökonomie, 1984–1990; d.40, bldg. 1, office 609, Business Center "Agat" Hermes Kreditversicherungs-AG, since 01.01.1991; 107023 Moscow, Russia Sales representative - until Aug. 2005; Tel.: +7 495 287 47 60 Mobile: +7 495 22 63 930 Head of Representative Office Euler Hermes KV AG – from E-Mail: [email protected] 2005 until 2010; web: www.igk-group.com [email protected] CEO OOO Euler Hermes Credit Management, Moscow – 2009 – 2010 Languages German, Russian, English ® 23 IGK – Specialist for credit risk management IGK Group ® One stop shop for credit risk management Credit information Trade Credit Insurance Debt collection ® 24 .